Trade Compliance

U.S. “Disappointed” with Canada Regarding Outstanding IPR Issues

Posted May 05, 2015

The Office of the United States Trade Representative (USTR) has released its annual “Special 301” Report on the adequacy and effectiveness of U.S. trading partners’ protection and enforcement of intellectual property rights (IPR).
“The Special 301 Report is an important tool – and a demonstration of this Administration’s resolve – to ensure that Americans can bring their inventions and creations to people all over the world without their work being infringed or misappropriated,” said USTR Michael Froman in a statement.

According to USTR, this report identifies a wide range of concerns, including (a) reported inadequacies in trade secret protection in China, India and elsewhere, as well as an increasing incidence of trade secret misappropriation; (b) troubling “indigenous innovation” policies that may unfairly disadvantage U.S. rights holders in China; (c) the continuing challenges of online copyright piracy in countries such as Brazil, China, India and Russia and trademark counterfeiting in China and elsewhere; and (d) market access barriers, including nontransparent and discriminatory measures, that appear to impede access to products embodying IPR and measures that impede market access for U.S. entities that rely upon IPR protection.

This year’s report reviews 72 trading partners, listing 37 of them as meriting particular concern, including Canada which remains on the “Watch List” owing to a number of underlying IPR and related issues still felt to be in need of addressing.

Regarding Canada’s implementation of its 2012 Copyright Modernization Act, provisions aimed at addressing copyright piracy over the Internet came into force in January 2015, and Canada completed its ratification of the WIPO Internet Treaties in August 2014. The United States continues to urge Canada to fully implement its WIPO Internet Treaties commitments and to continue to address the challenges of copyright piracy in the digital age.

Regarding border enforcement issues, the Combating Counterfeit Products Act became law in December 2014. The new law provides authority to Canadian customs officials to detain pirated and counterfeit goods being imported and exported at the border. The United States is disappointed that the new law does not apply to pirated and counterfeit goods in customs transit control or customs transshipment control in Canada. The United States urges Canada to provide its customs officials with full ex officio authority to improve its ability to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains.

With respect to pharmaceuticals, the United States continues to have serious concerns about the availability of rights of appeal in Canada’s administrative process for reviewing regulatory approval of pharmaceutical products. The United States also continues to have serious concerns about the lack of clarity and the impact of the heightened utility requirements for patents that Canadian courts have applied recently. In these cases, courts have invalidated several valuable patents held by U.S. pharmaceutical companies on utility grounds, by interpreting the “promise” of the patent and finding that insufficient information was provided in the application to substantiate that promise.

These recent decisions, which have affected products that have been in the market and benefiting patients for years, have led to uncertainty for patent holders and applicants, including with respect to how to effectively meet this standard. This unpredictability also undermines incentives for investments in the pharmaceutical sector.

The USTR states that it is closely monitoring developments on the foregoing issues and in addition to working directly with Canadian officials, alludes to the hope many of them can be resolved through the TPP trade negotiation process.